This week gold made a second sign of consolidation. The price barely advanced off the previous Friday and technical indicators deteriorated further. The odds continues to stay bearish. Let’s explore the hypothesis from different angles.
In June gold made a dramatic reversal and produced a solid Dark Cloud Cover (1 more point down and it would be a Bearish Engulfing). The move shifted the odds to the dark side on the monthly frame. However, the odds are not as high as they would be after engulfing and the candle requires a confirmation next month. From that perspective, a modest rally at the beginning of the month is quite possible.
The monthly indicators so far support further downwards moves.
The weekly candles formed a 7-week Tower Top, a very strong bearish statement. It is well supported by the falling indicators.
Together with the last red candle, this and the previous weekly candles are viewed as a bearish consolidation. This activity could take 2-5 weeks as long as the price stays below ~$1815-25. A decline is expected once consolidation done.
Among the notable weekly events this week:
– PSAR flipped bearish;
– MACD line and histogram moved below 0;
– bearish 8/20 EMA cross.
Possible development – horizontal within $1750-1815 channel. There is nothing bullish until we can see a solid green candle closed above $1815.
In the last three days gold formed an Advance Block formation that typically reflects an overextended rally. While the AB is normally a short-term reversal pattern, it could also be a harbinger of a major decline.
It looks like gold this week completed an ideal (or very close to ideal) motive wave down that greatly fits into the Fibonacci ratios and the channel. This wave is marked 1-5 in red.
The upwards wave that started on Jun 29 has more qualities of a corrective wave. I projected the possible target area for this wave in the red rectangle. The primary count in red. The blue – alternative.
Gold was damaged greatly in June on the monthly and weekly frames. The odds are on the dark side.
There is no immediate sign for further decline and I am expecting gold to continue consolidation for the next 1-3 weeks within $1750-1815 channel.
As long as the daily candles close below ~$1805, there would be no sign of a prolonged rally. If anything changes, I will address in my daily updates.
If gold is going to make a bottom and reverse, we should see the bullish signs at least on the weekly charts. So far there is none.
The longer term forecast and targets are discussed in details in the Monthly Analysis (link below).
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Previous Weekly and Long Term Forecast:
Previous Monthly Analysis: